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Reducing youth unemployment in Kosovo with the help of the private sector

Project completed
Two people on an adventure park ropes course.
With the support of SDC, tourism service providers are expanding their products and services, as in this adventure park in Peja district. © SDC

The Promoting Private Sector Employment (PPSE) project is strengthening companies in the food and tourism sectors and spurring job creation in Kosovo.

Country/region Topic Period Budget
Kosovo
Employment & economic development
SME development
16.11.2017 - 15.11.2021
 CHF  7’490’524
Background

Kosovo has the youngest population in Europe. The economy has been moderately growing during the past years, but it is still very weak and unable to provide the number of jobs needed to absorb those entering the labour market every year (around 36'000). The overall unemployment rate in Kosovo is 29%. Unemployment rates are even higher in the rural regions. In particular, unemployment rate among the minority communities are higher depending on the ethnicity, with RAE community having the highest unemployment rate of 80%. Considering that public sector cannot expand in terms of additional jobs. The private sector remains the only hope for absorbing the high number of unemployed youth.
Objectives

“SMEs that operate in well-organized and inclusive economic sectors, provide increased sustainable gainful employment for young women and men in Kosovo“.
As an expected result; By the year 2027, additional 2'000 (150% increase of target from phase 1) young women and men (beneficiaries) will be employed directly or indirectly in full time jobs due to PPSE‘s interventions.
Target groups

Young people tend to be more unemployed compared to older age generations. PPSE II will aim to target more young people seeking employment.

Women tend to be more unemployed compared to men, the employment rate among working-age women is only 12.9% (or 25% of employed people), compared to 45.6% for men. PPSE II will aim to design specific interventions in the sub-sectors that offer more potential for women inclusion.

Targeted interventions will be implemented to reach the minority communities in Kosovo, especially the Roma, Ashkali and Egyptians as the most excluded communities in Kosovo, along with other minorities, including the Serb community in the North. lt is planned that 10% of the employment created will be for minorities.
Medium-term outcomes
  • Outcome 1: “Young people, women and minorities benefit from gainful and inclusive employment, created in the dynamic SME‘s in the growing sectors“
  • Outcome 2: “Small and Medium Enterprises improve their offer, efficiency and competitiveness in improved and better organized inclusive market systems“
Results

Expected results:  

  • SMEs have improved the quality and diversification of their products and services
  • SMEs and farms have increased production
  • Service Providers offer improved business support services
  • SMEs have improved access to sales channels
  • Stakeholders have improved sector organisation and networking


Results from previous phases:  

During its first phase the PPSE program contributed to positive systemic changes in the sectors where it was intervening. For e.g.in the tourism sector the touristic offer has increased and tourism products have improved resulting in a significant increase of tourists. The sector actors started to commercialize (from enthusiast groups/NGOs to businesses) and see business opportunity in the sector.
Project interventions in the food-processing sector have contributed significantly in the uptake of contract farming. Linking farmers with the processing industry through the collection centres has resulted in a higher outreach to the farmers. Therefore in its second phase the project will continue working through the agents who have access to a wider network of farmers and companies. The project has also contributed to the response of the support markets such as packaging, certification, financing schemes, etc, following the growing trend of processing industry.

In terms of additional jobs and income the following results were achieved: 850 full time jobs have been generated, out of which 42% were for women and 9% for minority groups. The income increase is over CHF 2'000'000 (105% of the phase target) and around 1000 SMEs have benefitted through the project activities.
Directorate/federal office responsible SDC
Credit area Swiss cooperation with Eastern Europe
Project partners Contract partner
Swiss Non-profit Organisation
  • Swisscontact


Other partners

The second phase of the project will be implemented by a consortium consisting of Swisscontact and the local organization Riinvest Institute (selected through an open tender procedure in phase 1)
Coordination with other projects and actors

The already well established cooperation and coordination with SDC and SECO funded programs will be maintained and further enhanced especially with the SDC financed “Enhancing Youth Employment Program“ (EYE) which aims at decreasing youth unemployment, but tackles this through improving employability and matching between labour demand and supply as well as the lnvestment Climate Project II funded by SECO, aiming at improving institutional business related services, and overall doing business climate in Kosovo. PPSE will align and look for synergies with all donor projects (including also USAID, GIZ and EU projects).
Budget Current phase Swiss budget CHF    7’490’524 Swiss disbursement to date CHF    7’149’476
Project phases Phase 3 16.11.2021 - 15.11.2025   (Current phase)

Phase 2 16.11.2017 - 15.11.2021   (Completed)

Phase 1 01.04.2013 - 15.11.2017   (Completed)
  • Sector according to the OECD Developement Assistance Commitiee categorisation INDUSTRY
    Sub-Sector according to the OECD Developement Assistance Commitiee categorisation
    Small and medium-sized enterprises (SME) development
    Aid Type Mandate with fiduciary funds
    Project number

    7F08467

While Kosovo's economy has experienced moderate growth in recent years, poverty and unemployment remain persistent problems. The public sector has little room for growth and is unable to create new jobs. This is where the private sector comes in. Small and medium-sized enterprises (SMEs) account for three quarters of the jobs created in the private sector. Companies in the agri-food and tourism sectors have been identified as having a strong growth potential but are facing significant problems, in particular shortcomings in marketing and management. 

The food processing sector lacks access to raw materials and the market. It therefore needs to:

  • Increase farm production and improve access to sales channels, for example through contracts with large distributors;

  • Carry out organisational improvements and establish a certification to market its products nationally and internationally. 

    The tourism sector mainly needs to diversify and advertise Kosovo's tourist attractions, for example by marketing mountainous regions as destinations for both summer and winter tourism.  

It is essential to reinvigorate these two sectors. Over 55% of Kosovo's population is aged between 15 and 35. Some 36,000 members of this age group enter the labour market every year but fewer than 18,000 jobs are created. This has resulted in an overall unemployment rate of 29% (50% among young people), with the rate being considerably higher in rural areas and for women and minorities. Among the Roma, Ashkali and Egyptian (RAE) communities, unemployment is as high as 80%.

Sustainable and inclusive jobs

1,000 SMEs benefited from the project during the first phase. The tourism sector has experienced 10% job growth and considerably improved the quality and diversity of its services. Positive results have also been achieved in the agri-food sector: new technologies and a network for producers and distributors have facilitated links between farmers and the food processing industry. 850 full-time jobs were created in this sector, of which 42% were taken up by women and 9% by members of minority communities. Thanks to SDC's financial support for the PPSE project, SMEs are better organised and more competitive. 

SDC's goal for the second phase of the project is to achieve real integration of SMEs into well-organised, inclusive economic sectors, leading to sustainable employment growth, a diversification of products and services and greater competitiveness in the marketplace. Unemployed young people – especially young women and members of minority groups – will thus benefit from inclusive jobs created in growth sectors and SMEs.

In 2021, some 2,000 young people – 10% of them from minority groups – should benefit directly or indirectly from the project. Furthermore, lowering unemployment, improving the performance of the food sector (reducing dependence on the import of fruit and vegetables) and the tourism sector stimulate the economy, generating additional revenue for the government.

Synergy between stakeholders

The PPSE project fulfils several objectives set out in Kosovo's National Development Strategy 2016–21 and the Swiss Cooperation Strategy Kosovo 2017–20. Both strategies identify addressing youth employment as a key objective to improve the country's economic situation. To fulfil this objective, in addition to the PPSE project, SDC also supports the «Enhancing Youth Employment» project and SECO the «Investment Climate» project. By promoting sustained, inclusive and sustainable economic growth, these projects also further Switzerland's efforts to fulfil the UN's Sustainable Development Goals in promoting sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all.

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Last update 06.05.2021